Present day markets are pricing shares on the momentum of their industries, rather than the stock’s underlying value, according to Cyan Investment Management director Dean Fergie. 

Speaking to Reach Markets, Mr Fergie cautioned this fixation on ‘momentum’ (rather than fundamentals) is likely to be a defining trend of investing in the year to come.

For investors, this will mean the usual numerical analyses used to determine whether or not to buy won’t be as reliable as they once were, making it harder to pick good companies.

With this in mind, Reach Markets invited Mr Fergie to share three businesses he favours in the current market conditions.

Raiz Invest

Formerly known as Acorns, Raiz Invest (ASX: RZI) is an investment app which allows users to put small sums of money into one of six stock portfolios managed by the company.

It also offers users the ability to ‘round up’ any transactions they make with the difference between their purchase and the rounded up price being put into their Raiz investment account.

The company hit the bourse in 2018 after raising $15 million through an IPO with an issue price of $1.80 per share, and failed to make an impact – closing its first day of trade at $1.40.

And until 2021, the price fluctuated between around $1.10 and $0.40.

“It hasn’t been a great performer,” Mr Fergie said.

Mr Fergie and his team however didn’t invest until 18 months ago, when the business appeared to be turning itself around and the valuation looked “very attractive”.

“There’s clearly some very strong tailwinds with this sector at the moment,” he said.

“We’ve got extremely low interest rates, no-one’s getting any return whatsoever leaving their money in the bank; we’ve seen markets perform quite strongly recently, people like to see their wealth growing, and so there’s some huge tailwinds with Raiz.”

The CEO of Raiz Invest (ASX: RZI) Brendan Malone will be joining our next ‘The Insider: Meet the CEOs’ session on Wednesday 31st of March. Secure your spot now for an opportunity to hear from him live and engage in an interactive Q&A. Book here.

Alcidion

Alcidion (ASX: ALC) is a healthcare technology company enabling doctors, nurses, and clinicians to digitally record and track patient information so all relevant medical professionals can easily access accurate and up-to-date data.

Mr Fergie noted the company has a strong recurring revenues and net cash balance, and are very close to breakeven, and continue to sign on new clients across the UK and Australia.

And – like many software companies – Alcidion has very high margins (around 88%), he added.

“This has probably been one of our most successful investments in the past three or four years,” Mr Fergie said.

The CEO of Alcidion Group Ltd (ASX: ALC) Kate Quirke will be joining our next ‘The Insider: Meet the CEOs’ session on Wednesday 31st of March. Book your spot.

Swift Media

Mr Fergie’s final pick was Swift Media (ASX: SW1), a company which provides industry-specific digital entertainment services for the resources, hospitality and aged care sectors.

“The best way to explain it, I think, is that they provide media like you’d see on an airplane,” Mr Fergie said.

This includes very specific and targeted content and messaging – outlining safety practices, menus and activities relevant to users at a particular site.

The company has struggled in recent times, having purchased other businesses which have not performed as well as hoped, Mr Fergie said. 

But Swift Media have since brought in new leadership and the company’s financials are now pointing in the right direction, he said.

“It looks really, really good from an undervalued perspective,” he said.

 

The CEO of Swift Media (ASX: SW1) Pippa Leary will be joining our next ‘The Insider: Meet the CEOs’ session on Wednesday 31st of March. Book your spot.

This article is a summary of the information Mr Fergie shared with us during our fortnightly ‘The Insider: Meet the Fund Manager’ session. You can watch a recording of the session below, or you can click here to book into our next installment of the series where we will be joined by Shaun Cartwright, Managing Director of Viriathus Australia.

Reach does not assume responsibility for the accuracy or completeness of any information provided, and the views expressed are not reflective of Reach Markets position.

Any advice contained within this presentation is general advice and does not consider your personal circumstance, you should consider whether it’s appropriate for you.

The information we are giving you is for educational purposes only. “Investing is about understanding your risk” and every time you invest in the share market there is a risk of loss.

Sources:

• Raiz: Answers to Questions
• Stockhead: Fintech Raiz Invest falls in ASX debut after $15m IPO
• Market Index: Raiz